OREANDA-NEWS. August 1, 2012. MS prices have been decontrolled by the Govt of India w.e.f 25.06.10 and since then the Oil Marketing Companies (OMCs) are free to fix the selling price of petrol. It has been decided by Indian Oil Corporation to increase MS prices by Rs. 0.70/litre (excluding state levies) w.e.f midnight of 23-24 July, 2012.

The said revision has been necessitated due to increasing international oil prices and movement in INR-USD exchange rate. The average price of Indian basket of crude for the relevant pricing period considered is USD 101.28/bbl while International MS price is USD 111.59/bbl.  The Rupee-USD exchange rate is around Rs. 55.36/USD.  At these levels, IOC is incurring losses of about Rs. 1.41/litre on MS sales in the domestic market.  However, as the price movement is quite volatile, it has been decided that an increase of Rs. 0.70/litre (excluding state levies) may be effected at this juncture and the situation watched for some time depending upon which a further view will be taken at an appropriate time.

During current fiscal, the Corporation has already accumulated losses of  Rs. 1053 crore (Industry: Rs. 2323 crore) on MS sales during the first two months due to high international oil prices, deterioration in USD-INR exchange rate & inability of OMCs to revise MS selling prices to desired level. In addition, HSD, SKO(PDS) and LPG (Dom) selling prices remain unchanged since June,2011 resulting in current level of under recovery of  Rs. 10.01/litre on HSD, Rs. 27.20/litre on SKO(PDS) and  Rs. 319/cylinder on LPG(Dom). At these levels, projected under recovery of IOC during 2012-13 for these three products is  Rs. 86000 crores  (Industry -  Rs. 160000 crores). In these circumstances, the Corporation is unable to bear burden of any further losses.

As a consequence of the said revision, increase in selling price shall vary from Rs. 0.70/litre to  Rs. 0.91/litre (including State levies) depending upon the State taxes. In the state of Delhi, the price increase will be Rs. 0.70/litre (impact of State tax shall be nil on the increase as per Delhi Govt. VAT exemption order dated 16th June 2012). The price revision in other States will vary depending upon the respective rates of State VAT / Sales Tax.